Hardayal Charitable & Educational Trust, Firozabad V. I.T.O., Ward-5(2), Agra

ITA 58/AGR/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94116 (ITAT-AGRA)
• Duration Of Justice: 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 25-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BELU SINHA
• Assessee Lawyers: R K AGARWAL
• Keywords: Opportunity of being heard
• Section: 12A; 12AA; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SH RI G.C. GUPTA, VICE PRES ID ENT AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER ITA NO. 58 /AGRA/201 5 ASSESSMENT YEAR: 20 11 - 12 HARDAYAL CHARITABLE & VS. INCOME - TAX OFFICER, EDUCATIONAL TRUST, WARD 5 ( 2 ), FIROZABAD . 318, SHAMBU NAGAR, SHIKOHABAD, RIROZABAD. (PAN : A AATH 7652 M ) APPELLANT BY : SHRI R.K. AGARWAL, ADVOCATE & SHRI RAHUL AGARWAL, ADVOCATE RESPONDENT BY : SMT. BELU SINHA, SR. D.R. DATE OF HEARING : 23.07.2015 DATE OF PRONOUNCEM ENT : 12.08.2015 O R D E R PER INTURI RAMA RAO , ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE APPELLANT AGAINST THE ORDER OF LD . CIT(A) - II, AGRA DATED 21.10.2014 FOR THE A.Y. 2011 - 12, RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. BECAUSE THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) - II, AGRA HEREINAFTER REFERRED TO AS LD. CIT(A) GROSSLY ERRED, BOTH IN LAW AND ON FACTS, IN HOLDING THAT THERE WAS VIOLATION OF SECTION 13(1)(C) READ WITH SECTION 13(3) OF THE I.T. ACT ON ACCOUNT OF WITHDRAWAL OF RS 8,00,000 / - ON 14.03.2011 AND CONSEQUENTIALLY DENYING EXEMPTION OF CORPUS FUND OF RS 7,12,60,000/ - AND INTEREST OF RS 66,199/ - CLAIMED U/S 11 OF THE I.T. ACT. LD. CIT(A) FAILED TO APPRECIATE THAT AMOUNT WITHDRAWN RELATED TO ITA NO.58/AGRA/2015 A.Y. 2011 - 12 2 THE PURCHASE OF LAND MADE ON 16.02.2009 AND NOT FOR THE PERSONAL USE OF ANY PERSON REFERRED TO IN SECTION 13(1)(C) / 13(3) OF THE I.T. ACT. IN THE ABSENCE OF ANY EVIDENCE RELATING TO ALLEGED CLANDESTINELY DIVERSION OF TRUST FUND FOR PERSONAL USE BY THE TRUSTEE, THE PROVISIONS OF SECTION 13(1)(C ) OF THE I.T. ACT COULD NOT LEGALLY BE INVOKED. 2. BECAUSE THE LD. CIT(A) FURTHER ERRED, BOTH IN LAW AND ON FACTS, IN DISALLOWING ENTIRE CORPUS FUND AND THE INTEREST AS AGAINST ALLEGED MISAPPROPRIATION OF RS 8,00,000/ - . LD. CIT(A) FAILED TO APPRECIATE T HAT INCENTIVE PROVISIONS LIKE SECTION 11 OF THE I.T. ACT COULD NOT BE DENIED ENTIRELY FOR SO CALLED MINOR MISUSE OF TRUST FUND WITHIN THE MEANING OF SECTION 13(1)(C) OF THE I.T. ACT. 3. BECAUSE THE LD. CIT(A) ERRED, BOTH IN LAW AND ON FACTS, IN SUSTAININ G ADDITION OF RS 7,12,60,000/ - BEING CONTRIBUTION MADE WITH SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST. LD. CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT WAS ENJOYING REGISTRATION U/S 12AA AND THAT SUCH CORPUS FUND WAS A CAPI TAL RECEIPT, NOT THE INCOME, WHICH COULD BE SUBJECTED TO INCOME TAX. LD. CIT(A) FURTHER FAILED TO APPRECIATE BINDING JUDGMENT OF HON BLE ALLAHABAD HIGH COURT PASSED IN THE CASE OF APPELLANT IN A.Y. 2009 - 10. 4. BECAUSE LD. CIT(A) ERRED, BOTH IN LAW AND ON FACTS, IN HOLDING THAT THE APPELLANT HAS NOT FULFILLED THE CONDITION ENUMERATED IN SECTION 12A(1)(B) FOR OBTAINING AUDIT REPORT WITHIN PRESCRIBED TIME AND IN PRESCRIBED FORM (FORM 10B) AND AS SUCH NOT ENTITLED TO THE BENEFIT OF SECTION 11 AND 12 OF THE I. T. ACT. LD. CIT(A) FAILED TO APPRECIATE THAT THE REPORT IN FORM 10B DULY AUDITED WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IMMEDIATELY AFTER GRANT OF REGISTRATION U/S 12A BY HON BLE THE COMMISSIONER OF INCOME TAX. THE LD. CIT(A) FURTHER FAILE D TO APPRECIATE THAT IN THE ABSENCE OF ANY INCOME WITHIN THE MEANING OF I.T. ACT, THE PROVISIONS OF SECTION 12A(1)(B) ARE NOT LEGALLY ATTRACTED. WITHOUT PREJUDICE TO THE ABOVE, THE AUDIT REPORT SUBMITTED ALONG WITH THE RETURN WAS ON THE SAME FORMAT AS PRE SCRIBED IN FORM 10B AND AS SUCH MERELY FOR NOT MENTIONING FORM 10B, THE BENEFIT OF SECTION 11 COULD NOT LEGALLY BE DENIED. 5. BECAUSE LD. CIT(A) ERRED, BOTH IN LAW AND ON FACTS, IN NOT ADMITTING APPLICATION FILED U/S 46A OF THE I.T. ACT. LD. CIT(A) FAILE D TO APPRECIATE THAT THE CONTENTS OF APPLICATION WERE ONLY EXPLANATION OF FACTS NECESSARY FOR ADJUDICATION OF APPEAL AND WAS FILED ON THE ADVICE ITA NO.58/AGRA/2015 A.Y. 2011 - 12 3 OF LD. CIT(A) HIMSELF. THE REJECTION THEREOF ON THE FACTS STATED IN THE APPELLATE ORDER IS WHOLLY ILLEGAL. 6. BECAUSE LD. CIT(A) ERRED, BOTH IN LAW AND ON FACTS, IN HOLDING THE APPELLANT AS DEFAULTER FOR VIOLATING PROVISIONS OF SECTION 13(1)(C) READ WITH SECTION 13(2)(G) AND SECTION 13(3) OF THE I.T. ACT WITHOUT SPECIFYING AND IDENTIFYING THE PERSON WHO HAS UTILI ZED THE TRUST FUNDS FOR PERSONAL USE. THE INVOKING OF PROVISION ON PRESUMPTIONS IS WHOLLY ILLEGAL. 7. BECAUSE LD. CIT(A) ERRED BOTH IN LAW AND ON FACTS IN DISMISSING GROUND RELATING OF CHARGING OF INTEREST U/S 234A AND 234B. LD. CIT(A) FAILED TO APPRECI ATE THAT THE APPELLANT BEING A TRUST REGISTERED U/S 12A, HAD NO LIABILITY TO PAY ADVANCE TAX UNDER THE I.T. ACT AND AS SUCH, NO INTEREST AT ALL COULD LEGALLY BE CHARGED U/S 234A OR 234B. 8. BECAUSE THE ORDER IS AGAINST THE LAW & FACTS. 9. BECA USE THE APPELLANT CRAVES LEAVE TO ALTER/ MODIFY GROUNDS BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST WITH THE MAIN OBJECT OF RUNNING EDUCATIONAL INSTITUTION. IT WAS DULY GRANTED REGI STRATION UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) ON THE DIRECTION OF THE HON BLE ALLAHABAD HIGH COURT. RETURN OF INCOME FOR THE A.Y. 2011 - 12 WAS FILED SHOWING NIL INCOME ON 28.05.2012. THE CASE WAS TAKEN UP FOR SCRUTINY ASSE SSMENT AND THE ASSESSMENT WAS COMPLETED VIDE ORDER UNDER SECTION 143 (3) OF THE ACT AT A TOTAL INCOME OF RS.7,13,26,199/ - BY MAKING ADDITION OF CORPUS DONATION OF RS.7,12,60,000/ - AND OF RS.66,199/ - . FROM THE ASSESSMENT ORDER, IT IS CLEAR THAT THE A.O. DEN IED THE EXEMPTION UNDER SECTION 11 OF THE ACT PURELY ON THE GROUND THAT THE ASSESSEE HAD NOT FILED THE AUDIT REPORT IN FORM NO.10B ALONG WITH RETURN OF INCOME. BEING AGGRIEVED, APPELLANT ITA NO.58/AGRA/2015 A.Y. 2011 - 12 4 FILED APPEAL BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 21.10.2014 C ONFIRMED THE ORDER OF ASSESSMENT. HENCE, THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS SETTLED PRINCIPLE OF LAW THAT FILING OF AUDIT REPORT ALONG WITH THE RETURN OF INCOME IS NOT MANDATORY. AUDIT REPORT CAN AS WELL BE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS ONLY CURABLE DEFECT AND, THEREFORE, WE REMIT THE MATTER BACK TO THE FILE OF A.O. WITH THE DIRECTION TO COMPLETE THE ASSESSMENT DENOVO AFTER AFFORDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE APPEAL IS DISPOSED OF ACCORDINGLY. 4. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 1 2.08.2015 ) SD / - SD/ - ( G.C. GUPTA ) ( INTURI RAMA RAO ) VICE PRESIDENT ACC OUNTANT MEMBER DATE: 1 2 TH AUGUST , 201 5 PBN/* COPY OF THE ORDER FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA